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The Reserve Bank of India’s monetary policy committee (MPC) on Thursday kept key interest rates unchanged for a tenth straight meeting, retaining an accommodative stance amid the threat surrounding Omicron coronavirus variant.
Repo and reverse repo rates remain unchanged at 4 per cent and 3.35 per cent, respectively, said RBI governor Shaktikanta Das in a statement after a three-day meeting of the committee in Mumbai.
“India is charting a different course of recovery than the rest of the world, to be the fastest-growing economy,” said Das.
The six-member rate panel, which has been on pause since August 2020, retained its accommodative policy stance with a 5-1 vote, Das said, signaling the economy needed continued support despite accelerating inflation. While retaining the accommodative stance, he reiterated the “as long as necessary” language used since October 2019.
“Monetary policy actions will be calibrated and well telegraphed,” Das said, underlining that there won’t be any surprises.
ALSO READ: RBI Monetary policy live updates
The central bank has slashed the repo rate by a total of 115 basis points (bps) since March 2020 to soften the blow from the coronavirus pandemic and tough containment measures. The rate is now 250 bps below its level at the beginning of 2019, when the easing cycle began.
The RBI lowered the inflation outlook to 4.5 per cent for next fiscal year, down from 5.3 per cent in the current year. The central bank sees gross domestic product growth slowing to 7.8 per cent next fiscal, down from a 9.2 per cent expansion estimated by the government this year.
“Taking into consideration outlook for inflation and growth, in particular the comfort provided by improving inflation outlook, the uncertainties related to omicron and global spillovers, the MPC was of the view that continued policy support is warranted for a durable and broad based recovery,” Das said, according to Bloomberg.
Respondents in a February 2-4 Reuters poll were closely split on the timing of the next rise, with slightly more than half, 17 of 32, expecting a 25 basis point rise to 4.25% in April.
Among the remaining 15, 13 were nearly split between June and August. Only one economist said it would come as early this month, and one other said it would happen in October of this year.
(With inputs from agencies)
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